McGill Institute of Marketing (MIM) Seminar: Yefim Roth

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Abstract:

We clarify the conditions under which warnings that provide useful information backfire. Our analysis is based on two observations: First, counterproductive warned-against behaviors (like texting while driving) are typically rewarding. Second, decisions from experience reflect insufficient sensitivity to rare outcomes. These observations predict that a backfiring effect initially emerges when the warned-against behavior is unlikely to be chosen without the warning. In addition, they imply an increase in the choice rate of the warned-against behavior, with experience, when the probability of rewarding outcomes is high. Our experiments support these predictions in the context of warnings concerning risky clicks, danger zones, and misinformation. We describe a model that predicts the current results and clarifies their relationship to basic decision research.